China’s central bank will step up policy implementation to support the economy

China’s central bank will strengthen the implementation of its prudent monetary policy and step forward to support the economy, Vice Governor Pan Gonsheng said on Thursday.

Pan told a news conference that the People’s Bank of China (PBOC) will use various policy tools to increase liquidity injection to keep liquidity in the economy reasonably adequate.

The central bank aims to stabilize economic growth, jobs and prices, Pan said, adding that financial institutions should maintain discretion in their operations and hedge risks.

“We will continue to strengthen the implementation of prudent monetary policy and create a sound monetary and financial environment,” Pan said.

China’s cabinet has announced a package of 33 measures, covering fiscal, fiscal, investment and industrial policies, to revive its pandemic-ravaged economy.

Pan said China’s merchandise trade is expected to maintain a reasonable surplus this year and that relatively stable investment returns in yuan’s assets will help attract foreign investment.

The central bank has promised to increase support for a slowing economy, but analysts say the scope for policy easing may be limited by concerns about capital outflows as the US Federal Reserve raises interest rates.

China’s cabinet said on Wednesday it would increase credit quotas for policy banks by 800 billion yuan ($120 billion) to enable them to support infrastructure construction, according to state TV.

Premier Li Keqiang has vowed to achieve positive economic growth in the second quarter, although many private sector economists pencil in contraction.

Xue Lan, head of the monetary policy department of PBOC, told the briefing that the credit quota for policy banks will help improve their ability to finance infrastructure projects.